BLS: Inflation Holds Steady in January

The U.S. Labor Department’s Bureau of Labor Statistics reported this week that the consumer price index remained unchanged January for the second month in a row. Increases in housing, clothing, airfare costs, medical care and entertainment were offset by a seasonally adjusted decline in energy prices, the department said in a release.

“This shows the impact that a 1.7 % decline in energy prices has on the overall inflation reading,” he said.

The BLS also reported wholesale inflation rose 0.2% in December with core prices increasing by an equal amount. Compared to a year ago, wholesale inflation has increased at a 1.4% pace with the core prices up 1.8%.

Turner said that in its Jan. 30 statement, the Federal Reserve said, “Inflation has been running somewhat below the (Open Market) Committee’s longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices.”

The Fed also has said inflation must remain below 2.5% before it would contemplate raising the overnight target rate.

“The low inflation profile should help to keep money in the hand of members, but probably less than the impact that higher payroll taxes has diluted,” Turner said. “Consumer spending is about two-thirds of the nation’s GDP, which experienced a -0.5% contraction last quarter.”